Less than a week of discussions and several board meetings later, the news is in – Fiat Chrysler Automobiles is now officially out of the bid for its proposed merger with Groupe Renault. The proposed USD$35 billion merger between the two auto giants would have created the third-largest global automaker, pushing General Motors to the number four spot.

GM’s overall vehicle sales in 2018 stood at 8.4 million units, whereas Fiat Chrysler and Renault reported sales of around 4.8 million and 3.9 million units, respectively. In hindsight, if the 50-50 alliance between the two companies had pulled through successfully, the new combined company would have had an annual throughput of 8.7 million vehicles.

The fateful decision to pull the plug was taken at a board meeting that took place on Wednesday, June 5. Soon after, FCA released a statement that said, “The Board of Fiat Chrysler Automobiles meeting this evening under the Chairmanship of John Elkann, has resolved to withdraw with immediate effect its merger proposal made to Groupe Renault. FCA expresses its sincere thanks to Groupe Renault, in particular to its Chairman and its Chief Executive Officer, and also to the Alliance partners at Nissan Motor Company and Mitsubishi Motors Corporation, for their constructive engagement on all aspects of FCA’s proposal. FCA will continue to deliver on its commitments through the implementation of its independent strategy.”

The French government’s main concern regarding the merger with FCA had to do with how it would fit in with Renault’s pre-existing alliance with Nissan.

“The proposal currently being discussed is a full merger which—if realized—would significantly alter the structure of our partner Renault. This would require a fundamental review of the existing relationship between Nissan and Renault. From the standpoint of protecting Nissan’s interests, Nissan will analyze and consider its existing contractual relationships and how we should operate business in the future," Hiroto Saikawa, President & CEO, Nissan Motor Corporation.

For the mega deal to have seen the light of day, it needed the approval of the French government, which happens to be the largest shareholder of Groupe Renault, with 15 perent under its command. Without France’s vote of approval, FCA-Renault deal would not eventuate. Meanwhile, it seems likely that the French government’s main concern regarding the merger with FCA had to do with how it would fit in with Renault’s pre-existing alliance with Nissan. This comes just days after Hiroto Saikawa, CEO Nissan said, “The proposal currently being discussed is a full merger which—if realized—would significantly alter the structure of our partner Renault. This would require a fundamental review of the existing relationship between Nissan and Renault. From the standpoint of protecting Nissan’s interests, Nissan will analyze and consider its existing contractual relationships and how we should operate business in the future.”

Regarding the whole circumstance around its planned merger with Renault, the American-Italian carmaker put out a statement that read, “FCA remains firmly convinced of the compelling, transformational rationale of a proposal that has been widely appreciated since it was submitted, the structure and terms of which were carefully balanced to deliver substantial benefits to all parties. However it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”

From the standpoint of protecting Nissan’s interests, Nissan will analyze and consider its existing contractual relationships and how we should operate business in the future.

According to Bruno Le Maire, the French Finance Minister, there was no reason to expedite the deal between FCA and Renault, though he was definitely in agreement to the merger, itself. However, the finance minister asked for more time to evaluate the deal before it was given the nod. Furthermore, another concern that stalled the process was France’s concern over the possible loss of jobs at Renault’s plants in the country. In the meantime, Groupe Renault expressed its overall disappointment over the tanked merger, “We view the opportunity as timely, having compelling industrial logic and great financial merit, and which would result in a European based global auto powerhouse. We appreciate Nissan’s constructive approach and wish to thank FCA for their efforts and the Renault’s Board of Directors for its continued confidence. Further, we believe it emphasises the attractiveness of Renault and of the Alliance.”